Jinhui Shipping and Transportation Limited (JIN.OL) Earnings Call Transcript & Summary

Good morning to those in Europe, and good afternoon to those in Asia. This is Wei Ching of Jinhui Shipping and Transportation Limited speaking. Thank you for joining the company's Q2 and first half 2025 results presentation. I'll quickly run through the results. As of Q2 2025, revenue for the quarter, USD 40 million. EBITDA for the quarter, USD 15 million Net loss for the quarter, USD 1.9 million and basic loss per share for the quarter, USD 0.018 per share. For the first 6 months of 2025, revenue for the period, USD 80 million. EBITDA for the period, USD 50 million. For the 6 months of 2025, we recorded a net profit of USD 15 million, basic earnings per share USD 0.139. And as of the end of June 2025, gearing is at 15%. On a quarter-to-quarter basis, Q2 2025 has recorded a drop in revenue of 2% relative to Q2 2024. In terms of net profit, we're down USD 11 million compared to Q2 2024 quarter-on-quarter. The average time charter equivalent $13,860, which is 10% down from Q2 2024 of $15,407. For the full first half of 2025, revenue is up 15% compared to first half of 2024. Net profit is up USD 3.9 million relative to first half 2024 at USD 15.1 million. The average TCE for the full 6 months of 2025 relative to first half 2024 has dropped 2.9% at USD 13,538 per day. The group reported a consolidated net loss of -- we rounded up to $2 million for the current quarter with chartering revenue slightly decreased 2% to $40 million. For the first half of 2025, the group reported a consolidated net profit of USD 15 million and chartering revenue increased 15% to USD 80 million. This included a loss of USD 2.4 million on the disposal of a Supramax, which was delivered to the purchaser in May 2025. Shipping-related expenses increased to USD 22.9 million, primarily due to increased shipping operational costs, particularly crew costs, spare parts and consumables associated with the expansion of the group's fleet, which reached to 25 vessels as of 30 June 2025. This rise in shipping-related expenses was partially offset by the reduction in higher payments for chartered-in vessels following a decrease in number of chartered-in vessels during the quarter. Higher payment of $2.2 million on short-term leases was incurred during the quarter as compared to USD 6.9 million for the last corresponding quarter. Bunker-related expenses rose due to increased fuel consumption associated with repositioning of vessels between time charter contracts and bunker usage for voyage charter operations. Daily running costs of owned vessels increased from Q2 2024 of USD 5,396 per day -- daily running costs, sorry, I shouldn't repeat, to Q2 2025 of USD 6,719 per day due to the expansion of fleet size as certain initial costs, especially spare parts and consumable stores were incurred for newly delivered vessels. The rise in finance costs mainly attributed to the loan drawdown for financing of vessels upon the deliveries from the second half of 2024 to first half of 2025. Capital expenditure of USD 6.9 million was incurred for the current quarter, mainly for installment paid for newbuildings and dry docking costs. We repaid USD 11 million of bank borrowings during the quarter. As at June 30, 2025, secured bank loans amount to USD 100 million with current portion and noncurrent portion of USD 10 million and USD 90 million, respectively. As at the end of June 2025, 32 vessels, of which 25 owned vessels, including the one which has been disposed of and classified under assets held for sale and 7 chartered-in vessels with total carrying capacity of 2.3 million metric tonnes. Two vessels have been arranged under 2 sales and leaseback agreements, both of which became effective in early July 2025. This is the summary of financials, which I think is self-explanatory as I've gone through in the previous slide, so I won't repeat. The key financial ratios as of Q2 2025, total assets of USD 549 million. which represents a good increase relative to Q2 2024. The numbers are self-explanatory. Total equity, USD 383.85 million. Secured bank loans now stands at USD 100 million, just a little above, which is an increase from Q2 2024 due to our fleet size. Current ratio 1.5:1. Net gearing, 15% relative to 7% in Q2 2024. Available liquidity at USD 42.99 million and return on equity minus 0.5%. During the quarter, the group entered into an agreement to dispose of a 208 Supramax at a consideration of USD 10.2 million. The vessel was delivered to the purchaser in July 2025. The group also entered into 2 sales and leaseback for 2 vessels as the group believes that the agreements can gain access to additional working capital at a reasonable cost. Total consideration of about CNY 203 million, both agreements became effective in early July 2025. As at June 30, 2025, 32 vessels, of which 25 owned vessels, including 2 vessels under sales and leaseback agreements and one which has been disposed of and reclassified under assets held for sale and 7 chartered-in vessels with total carrying capacity of 2.3 million metric tonnes. Subsequent to the reporting date, the group entered into 3 agreements to dispose of 3 Supramaxes at total consideration of USD 32.3 million. 2 were delivered to the purchasers in July 2025, and the third one will be delivered to the purchaser in the fourth quarter of 2025. I think if you look at our S&P activities, you would have noticed that we have been taking advantage of demand of older vessels in the market and take the opportunity to sell out older vessels, get liquidity back into the company and get ourselves ready to take delivery of 2 newer ones, 2 newbuildings, which will be delivered in 2027. We do this also because the interest rate environment is still fluid. Borrowing cost is high. We believe it's prudent to maintain a strong financial balance sheet and keep gearing under check. This chart, again, pretty self-explanatory. It looks very nice, showing the evolvement of our own fleet. This is a full list of the particulars of our vessels, our own vessels. The average age of our own vessels is now 14 years old. In terms of chartered-in vessel, we have 1 Capesize chartered in for long term, 2 Panamax chartered in for long term, 2 long-term chartered in Ultramax and 2 short-term chartered Ultramax. The long-term chartered-in vessels their names and their size and their age year builds are as self-explanatory on the slide. The total carrying capacity of chartered vessels is 676,000 metric tonnes. As of end of June 2025, we have USD 100 million of secured bank loans. 10% will be repayable within 1 year. Another 10% will be repayable within 2 years and 80% will be repayable within 3 years. We will, of course, manage this debt position so that it will be -- the maturity profile will be healthy at all times. Total cargo volume as of Q2 2025, 3.23 million tonnes. 58% are minerals, 16% coal, 7% steel products, 5% cement, 4% agricultural products and 10% other miscellaneous goods. In terms of distribution of cargo, 30% of our cargoes are being loaded in China, 28% in Africa, 23% Asia, excluding China; 10% South America, 7% Australia and 2% North America. This is in terms of chartering revenue. In terms of discharging, 37% of the cargo are being discharged in China, 30% in Africa, 29% Asia, excluding China, 2% South America, 1% North America and 1% Australia. A more detailed breakdown of our time charter equivalent. As of Q2 2025, let's look at the Capesize first. Q2 USD 19,300 per day. For the full 6 months, first half of 2025, this TCE for Capesize will be USD 21,203 per day. For Panamax fleet, Q2 2025, USD 15,046 per day. This is a drop from Q2 2024 TCE of $17,702. For the first half 2025, the TCE of the Panamax is USD 13,795 per day. For Ultramax, Q2 2025, $13,158. This also represents a drop from Q2 2024. First half 2025, USD 12,674 per day. This translates to for all ships, Q2 2025, USD 13,860 per day. For first half 2025, USD 13,538 per day. As of the date of the announcement, we have successfully covered 67 of our Capesize and Panamax vessel days for the second half of 2025. That's starting from July 1 with an average rate of USD 22,000 and USD 18,000 per day, respectively. For Ultramax/Supramax, 45% of vessel days were -- was covered at average rate of USD 14,000 per day for the second half of 2025. For the daily vessel running cost of owned vessels, as mentioned in the earlier slides, for Q2 2025, the daily running cost of our own vessels, USD 6,719 per day, which represents not a good increase from Q2 2024, but this is mainly due to taking on new vessels where a lot of the initial cost, spares and consumables will be booked right away. I think this pattern is most of those who follow our company will be quite familiar. Outlook. The outlook is -- I have to say, in the current operating environment is -- there's a lot of uncertainty. There's uncertainty due to geopolitics, trade war between -- China-U.S. trade war, tariff war, actual military actions taking place in -- from Ukraine to Middle East, there's a lot of unrest in our world right now that causes a lot of disruptions in terms of trade routes. What we have observed is that there's -- the appetite to commit long term has reduced, be it from long-term charters to the ordering of new vessels has reduced in recent months. Market participants, our fellow ship owners, charters are all afraid to commit to long term. Adding to that, I think you -- there has been -- although the supply-demand -- maybe let me step back maybe not supply demand, but the supply of new ships has been relatively sensible in our view. But however, nevertheless, a lot of new ships were ordered and these ships will be coming online. They are actually already slowly coming online. This actually will somewhat add supply to the market given the market has been relatively buoyant where the scrapping of old vessels is not as high as we wish them to be. Overall, we believe we remain again to be cautiously optimistic. We will continue to maintain a very healthy balance sheet. We are doing our best to take opportunities to maintain a young fleet, sell down older ships to other aspiring owners and take on new ships, we ordered a couple in the newbuilding market, and we will -- when the opportunity arise, as shown before, we are not afraid to buy some younger ships in the secondhand market. But this -- all these actions will be subject to maintaining a strong balance sheet. I think having a strong balance sheet, maintaining good liquidity, low gearing is crucial, is of pinnacle importance for shipping. This is all for me. If you have any questions, please fire away.

Thank you for your question. When we consider our sales and leaseback agreements, we have to consider, firstly, is there good demand in the S&P market. When I say good demand, I mean aspiring buyers willing to pay a price tag that we find attractive. Second consideration is that whether we have any -- our customers, we see from our customer base whether there is need to maintain higher -- maintain the current carrying capacity. For example, right now, I have -- we have 2.6 million tonnes of carrying capacity. If we sell down ships directly, then we lose that carrying capacity. Sometimes we want to maintain certain carrying capacity so that we can continue to service our customers. Some ships -- some of our ships, our customers have a preference over. So we would continue to use certain ships and hence, arrange a sales and leaseback arrangement to service certain customers. I hope this answers your question if you understand what I mean. Yes. Crew cost is a hard nut to crack in our world. There's a bit of it is inflation, but also a good part of it is because when we take on new ships, we need to buy quite a substantial amount of new spare parts, consumables, et cetera. So all these will be booked right away. This will cause a rise on average -- average daily running cost. It will ease off as quickly as in Q3, but part of it will be inflation, in particular, crew cost. We are also doing some voyage contracts. So we will be absorbing some bunker costs. Then this will be subject to the -- how the bunker price will move in the future. Inflation, I'm afraid, is something that we cannot avoid.

Okay. If there are no further questions, I'll call this the end of the presentation. Thank you very much for joining Jinhui Shipping and Transportation Q2 and half year results presentation. And we look forward to bringing further good news to shareholders in the next quarter. Thank you.